Project Summary Alveolar type II cell (AEC2) dysfunction has been implicated as a primary cause of pathogenesis in many poorly understood lung diseases that lack effective therapeutics. Childhood interstitial lung disease (chILD) is a group of monogenic diseases of the AEC2, which can be caused by autosomal dominant mutations in the surfactant protein C (SFTPC) gene. These mutations are classified based on their location in the pro-SFTPC protein as BRICHOS or non-BRICHOS, and may result in protein misfolding and aggregation, impaired lipid metabolism, ER stress, and ultimately apoptosis in AEC2s. AEC2s are inaccessible to study in the developing human embryo and difficult to study in infants/children. They proliferate poorly and rapidly differentiate into other cell types when isolated and cultured. Generating AEC2s de novo using induced pluripotent stem cell (iPSC) technology would provide the first opportunity to study diseases of the alveolar epithelium in-vitro, including SFTPC mutations. Individuals carrying SFTPC mutations are believed to be susceptible to lung disease due to two distinct pathogenic processes initiated in AEC2s, both of which can be mechanistically interrogated in disease-specific iPSC-derived AEC2s (iAEC2s). We hypothesize that BRICHOS SFTPC mutations will induce upregulation of all three canonical UPR pathways in iAEC2s, leading to apoptosis, whereas non-BRICHOS mutations will result in to mistrafficked surfactant protein aggregates in endosomes and at the plasma membrane, leading to dysfunctional surfactant metabolism. This hypothesis will be tested in two specific aims. In aim 1, we will use transcription activator-like effector nucleases (TALENs) to target the AEC2 lineage-specific SFTPC locus of human iPSC lines with a fluorescent reporter gene. This will enable the first ever isolation of a pure population of patient-specific iAEC2s after lung epithelial differentiation. In aim 2, we will target wild type and mutant GFP/SFTPC fusion genes into the SFTPC locus of patient-derived iPSC lines, thereby engineering a novel model system for real time visualization of pathogenic processes responsible for AEC2 toxicity due to protein mistrafficking in iAEC2s with SFTPC mutations. Ultimately, we intend to use iAEC2s from patients with SFTPC mutations to perform an in-vitro screen for therapeutics that may ameliorate mistrafficking and ER stress. Completion of these aims would represent the first critical steps towards achieving our long term goal of developing clinically applicable in vitro models able to predict personalized responses to drug therapies for the patients from whom the iPSCs were derived.